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In the recent market correction, I observed many finfluencers and mutual fund distributors cajoling their over-concerned audience & customers by giving them reasons regarding why the markets will bounce back soon and why they should think of the long term and not worry too much.
And this is when the markets didn’t even correct much – just around 10%. In the past, markets have corrected by more than 50%, a usual occurrence every decade. I am sure we will see such massive corrections in the future as well.
Of course, nobody can tell when & how. I wonder what stories will be told when the portfolios will decline to such an extent for those who are not following a suitable asset allocation.
After every major market crash, a large number of investors leave the equity markets believing it’s not for them.
Unfortunately, they start the investments with the wrong expectations of making quick money, awed by the ongoing market upswing.
They end up overexposing their portfolios to equity when the markets have become extremely expensive. Naturally, at some point, markets course-correct and that leads to heartburn.
During this recent correction, none of our clients reached out to us with concerns. Why? Because our client’s portfolios declined much less than the correction in the markets. They understand what to expect from investments.
We have always believed that setting the right client expectations and designing a suitable portfolio according to risk profile are the only ways to avoid disappointments from investments.
In today’s competitive world, buy and hold doesn’t work. One needs to dynamically look at rebalancing the portfolios to align with market valuations not just to safeguard portfolios from the downside but to enhance upside potential.
This way, your compounding journey will go on for a longer term giving you the exponential portfolio growth that you desire.
Originally posted on LinkedIn: www.linkedin.com/sumitduseja
Truemind Capital is a SEBI Registered Investment Management & Personal Finance Advisory platform. You can write to us at connect@truemindcapital.com or call us at 9999505324.
